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EC351: International Economics

Session: One

Prerequisites: Intermediate microeconomics and macroeconomics, knowledge of single variable calculus

Dr Swati Dhingra
Dr Gabriel Zucman

This course provides an analysis of the economic relationships between countries, covering both trade and monetary issues. The first part of the course focuses on international trade theory and policy. In this part we address some of the classic questions of international trade theory such as: 

  • Who trades what with whom? 
  • What are the effects of trade on welfare and the income distribution? 
  • What are the effects of barriers to trade and economic integration? 
We look both at the answers of classical and new trade theory to these questions. The first part ends with an overview of recent theoretical and empirical research on the role of heterogeneous firms in international trade.

The second half of the course considers international macroeconomic issues. This part of the course starts out with an overview of the balance of payment accounts and open economy income identities. The course then focuses on some of the key questions in open economy macroeconomics such as: 
  • How are nominal exchange rates determined? 
  • What does it mean for a currency to be overvalued or undervalued? 
  • Why do countries run large current account surpluses or deficits? Are such external imbalances sustainable? 
  • Why do some fixed exchange rate regimes fail and end in a currency crisis? 
  • What are the benefits and costs of a common currency? 

Main Text

P. R. Krugman, M. Obsfeld and M. Melitz, International Economics, (9th edition), Pearson Education (2011).

Lectures: 36 hours    Classes: 12 hours
Assessment: Two written examinations